The Office of Foreign Assets Control (OFAC), an agency of the United States Department of the Treasury, is tasked with the regulation and enforcement of U.S. economic sanctions and trade embargoes involving foreign countries and targeted persons. The agency takes action in an effort to achieve the national security goals and foreign policy objectives of the United States. Its legal authority is derived from different places, ranging from executive orders to legislation to international agreements.

What is an OFAC Sanctions Attorney?

The sanctions imposed by the Office of Foreign Assets Control involve a complex and ever-changing set of rules, regulations, and foreign policy developments. They also involve an ever-changing list of persons and countries of interest. Any individual, organization, or foreign entity which becomes a real or perceived threat to national security, U.S. foreign policy, or U.S. economic policy can be sanctioned. When dealing in international business matters and transactions, one must be aware of, anticipate, and be in constant compliance with all OFAC laws and regulations. Staying well-informed of shifting policies may be a challenge, but a knowledgeable OFAC lawyer can provide sound counsel to help with specific licensing, issues with current foreign activities, and other legal needs.

OFAC Functions

Those engaged in commerce, international business, or trade with blacklisted countries or targeted persons may be subject to criminal penalties and administrative actions. Even people conducting personal transactions with family members, friends, nonprofit organizations, and charities are subject to the sanctions administered by OFAC. Willful violations of the sanctions can be prosecuted criminally by the Department of Justice. However, OFAC can hold a person civilly liable for any violation of the sanctions, including violations committed innocently or inadvertently.  Accordingly, sanctions are commonly regarded as strict liability offenses.

Prohibited Transactions

How does one know if what they are doing is prohibited by sanctions? OFAC maintains a blacklist of targeted persons, entities, and organizations called the Specially Designated Nationals and Blocked Persons List (commonly referred to as the SDN List). Moreover, there are some sanctions that apply to entire nations, regardless if they appear on the SDN List. Due to ever-shifting government and political interests worldwide, this is a dynamic list that is constantly changing as new targets are added and more legal authorities are created by the Congress and President to expand sanctions. For information on SDN list removal, click that link, or contact an OFAC law firm to learn about the process of removing a name from the SDN List.

What’s more, is that the prohibitions contained in sanctions are construed very broadly. They often prohibit virtually all transactions and dealings, including those performed directly or indirectly.  Also prohibited is the facilitation of a transaction performed on behalf of foreigners if that transaction would be prohibited if it had been performed by a U.S. person.

OFAC Violations

The combination of rapidly evolving sanctions programs, broad prohibitions, and strict liability means a person or entity can be in violation of the most up-to-date sanctions without actually knowing a violation has occurred. It can be particularly difficult for those dealing with foreign entities to stay abreast of the latest OFAC sanctions. If you have a business or are a representative of a financial institution or entity that requires assistance with compliance measures regarding U.S. sanctions, or you have been notified that you are under investigation regarding alleged violations of these rules, contact a dedicated OFAC lawyer immediately. This may come in the form of a notice on your credit report.

An OFAC law firm may provide legal advice and counseling regarding international business matters, as well as assist with the following:

U.S. citizens, as well as those with interests or property which fall under U.S. jurisdiction, are subject to OFAC sanctions. Therefore, in dealing with international matters, it is best to proceed with an extra measure of caution. Obtaining knowledgeable legal counsel from an OFAC lawyer regarding the latest national security controls imposed by the U.S. Government may be the best way to avoid possible penalties such as fines, the freezing of assets, or arrest.

Targeted Foreign Countries and Regimes

Unrest and political uprisings in foreign nations can quickly lead to sanctions against countries and regimes once deemed suitable for international business and trade. Foreign business affairs deemed legal one day could be grounds for legal action the very next day, almost without warning. For instance, as recently as March of 2014, President Barack Obama signed Executive Order 13660 placing sanctions on those involved in the Ukrainian revolt:

“The actions and policies of persons including persons who have asserted governmental authority in the Crimean region without the authorization of the Government of Ukraine that undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.”

These individuals and those who support them — and others like them in foreign nations around the world — are subject to asset freezes and denials of immigrant and nonimmigrant entrance into the United States. Furthermore, those subject to U.S. law are prohibited from making contributions of any kind to or from these persons. U.S. persons are also prohibited from transacting with such persons for goods and services and prohibited from taking any action which serves to evade these sanctions.

As with all other OFAC sanctions, the intent behind these statutes, executive orders, and regulations is to protect national security and maintain an effective foreign policy. Currently, OFAC sanctions are in place in one form or another in these foreign countries:

  • Burma
  • Cuba
  • Iran
  • Libya
  • North Korea
  • Russia
  • Somalia
  • South Sudan
  • Sudan
  • Syria
  • Ukraine
  • Venezuela
  • Zimbabwe

Financial dealings with and support of people within these nations may possibly violate U.S. sanctions. Involvement in activity which is questionable requires a prompt audit of compliance. Proper licensing and sanctions compliance by an OFAC lawyer may help to eliminate or limit the risk of OFAC enforcement. An OFAC law firm or attorney who is well versed in OFAC regulations and U.S. sanctions is best-suited to help with these endeavors.

OFAC also administers sanctions programs that target specific activities that harm U.S. national security and foreign policy:

OFAC and Terrorists

Foreign regimes and individuals that have carried out acts of terrorism against the United States or U.S. nationals, those who pose a very real threat of terrorist activity, or those who support terrorist factions are, according to Executive Order 13224, “an unusual and extraordinary threat to the national  security, foreign policy, and economy of the United States.” This order defines terrorism in Section 3, subsection d, as follows:

The term “terrorism” means an activity that —

(i) involves a violent act or an act dangerous to human life, property, or infrastructure; and

(ii) appears to be intended —

(A) to intimidate or coerce a civilian population;

(B) to influence the policy of a government by intimidation or coercion; or

(C) to affect the conduct of a government by mass destruction, assassination, kidnapping, or hostage-taking

Due to the imminent or potential threat against the nation’s security, the government prohibits business, trade, and other financial transactions with those classified as terrorists in the Annex of Executive Order 13224 and other executive orders. You will find a pdf copy of the order here. Many other orders, laws, and regulations related to the Counter Terrorism Sanctions program are located here. The Counter Terrorism Sanctions program administered and enforced by OFAC are a collective authority imposed by the President of the United States, public statutes passed by Congress, and United Nations Security Council Resolutions (UNSCRs). Any attempt to sponsor, provide assistance, provide technological support, provide finances or materials, or provide services to listed terrorists is subject to severe civil and criminal penalties.

International Narcotics Traffickers

As with terrorists and foreign countries which have been deemed a threat to the nation’s security, known foreign drug cartels and narcotics traffickers are subject to OFAC sanctions as well. This is due to America’s attempts to combat international organized crime. According to the Code of Federal Regulations (CFR) § 598.310, “[t]he term narcotics trafficking means any illicit activity to cultivate, produce, manufacture, distribute, sell, finance, or transport narcotic drugs, controlled substances, or listed chemicals, or otherwise endeavor or attempt to do so, or to assist, abet, conspire, or collude with others to do so.”

Any willful financial or business dealings with a known, registered foreign narcotics trafficker are subject to criminal penalties including up to 10 years in prison and a maximum fine of $10 million. These transactions do not even have to be related to actual drug trafficking. The officer, director, or agent of an offending entity who knowingly violates sanctions against foreign narcotics traffickers is subject to a maximum of 30 years in prison and a maximum fine of $5 million. The breadth of persons and companies subject to such sanctions is apparent from the trafficking networks and charts published on OFAC’s website. Such charts and the laws, regulations, and orders involving the Counter Narcotics Trafficking Sanctions program can be found here.

The Proliferation of Weapons of Mass Destruction

In an attempt to eliminate the increasing spread of biological, chemical, and nuclear weapons, OFAC prohibits certain proliferation activities and transactions that support thereof. U.S. persons are required to block the property and interests in property of those targets who engage in activities that have been determined by the U.S. Government to support the proliferation of WMDs. Originally focused on Iran, North Korea, and Syria, such sanctions have also been levied against Russia and Belarus.

An individual who willfully transacts with a person targeted as a WMD proliferator can incur criminal consequences which may include up to 20 years in prison and a fine of up to $250,000. For an entity, the fine is increased to $500,000. Additional civil penalties are cited at a maximum of $50,000 per violation. The laws, regulations, and orders related to the Non-Proliferation Sanctions program can be found here.

OFAC Compliance and Subpoenas

With the myriad sanctions and regulations implemented and enforced by OFAC, it is important to ensure that you or your business does not violate any OFAC sanctions. Furthermore, in the unfortunate instance that you or your company has been served an OFAC Administrative Subpoena, it is vital that you provide all requested documentation and answer OFAC’s questions in a truthful and straightforward manner.

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